PERSONAL FINANCE MANAGEMENT: How banks can use personalized services to increase customer satisfaction and compete with fintechs

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The ability to conduct banking activities via a sleek mobile app is no longer enough to satisfy consumers — it's table stakes. Banks now need to provide additional tools that keep users engaged in-app and enable them to better manage their financial lives. Yet it seems that many are coming up short in providing these solutions — 31% of US consumers aren’t managing their finances, according to a report from technology supplier Personetics seen by Business Insider Intelligence.

Banks need to focus on deploying robust personal finance management (PFM) features that pull consumers in. PFM tools used to focus mainly on tracking spending, but now they extend to helping people manage their overall financial health, investments, and savings — all automatically, according to Eran Livneh, VP of marketing at Personetics. Introducing these features can help banks keep their customers more engaged, while ensuring that their offerings remain competitive with those of fintechs.

There are three common approaches banks can take to effectively implement these tools — partnering with a PFM-focused fintech, working with a PFM technology supplier, or acquiring a PFM startup.

Partnering with a PFM-focused fintech can save banks important time. This approach enables the partnering bank to bypass building these features itself, saving a lot of time and enabling the bank to go to market quicker. However, banks taking this approach must be prepared to forego the ability to implement more tailored services.

PFM technology suppliers, on the other hand, can help banks overhaul their mobile apps with specially designed features. These firms operate a business-to-business (B2B) model and aim to provide the enabling infrastructure banks need to successfully offer PFM features to their customers. They include UK-based PFM supplier Meniga and Israel's Personetics.

Acquiring a startup is usually a more expensive option, but it also provides a couple of unique benefits. These include the ability to acquire valuable talent and having complete control over the integration.

PFM tools are set to become an expected facet of all financial products. That means banks need to choose a strategy now that will enable them to stay on top of the PFM trend in the future. It's also important that banks avoid sticking with certain PFM features and leaving it at that — they have to ensure that these [...]